July 25, 2014

Reynolds American and Lorillard Could Possibly Merge

If Reynolds American acquired competing cigarette manufacturer Lorillard, the incorporation of the two Triad cigarette companies could signify merging and quite possibly layoffs in the Triad.

As reported by a survey in The Financial Times, Winston-Salem-based Reynolds has equipped investment bank Lazard to take a look at a likely $20 billion offer with Greensboro-based Lorillard. Both firms refused to express any opinions to The Business Journal, and numerous experts were doubtful that such an agreement would even work out as planned. However if the agreement were to step forward, it would merge the No. 2 and No. 3 U.S. cigarette manufacturers. As outlined by The Financial Times, Reynolds handled 25 % of the entire North American cigarette market in 2012, while Lorillard only 11.7 %. Richmond, Va.-based Altria, the producer of best selling Marlboro, owned 41.5 %.

Regional economist Don Jud stated similar agreement do generally signify “shutting something or dismissing people" so as to comprehend financial savings. Reynolds engages 2,500 in the Triad, while Lorillard comes with 1,800 workers in the region, based on Business Journal investigation. Jud also stated that such an offer might even indicate relocating the major offices for both firms into one head office in the Triad.

Andrew Brod, a representative of the UNC-Greensboro’s Center for Business and Economic Research, explained a deal of this type could influence Greensboro a lot more than Winston-Salem at the moment when the Gate City's business community is smaller than it was years back. On the other hand, such an agreement would definitely assist Reynolds and supply the company with an even larger competing edge towards Altria and Phillip Morris International, he added.

Reynolds could in addition recognize more efficiencies inside of its submission and transport actions, mentioned Kay Dobie, leader of the Transportation Institute. "If they realize to get their submission into one easy moving process, the merged company might come out financially more powerful," she said.

Reynolds at the moment has undertaken actions to generate logistics efficiencies and financial savings in recent times. The cigarette manufacturers outsourced its local logistics operations in 2009 within the company’s long lasting strategy to concentrate on its key business of producing and advertising tobacco products.

By Lora Dowson, Staff Writer
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